Correlation Between Texas Capital and BancFirst
Can any of the company-specific risk be diversified away by investing in both Texas Capital and BancFirst at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Texas Capital and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Capital Bancshares and BancFirst, you can compare the effects of market volatilities on Texas Capital and BancFirst and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Texas Capital with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Capital and BancFirst.
Diversification Opportunities for Texas Capital and BancFirst
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Texas and BancFirst is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Bancshares and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Texas Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Texas Capital Bancshares are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Texas Capital i.e., Texas Capital and BancFirst go up and down completely randomly.
Pair Corralation between Texas Capital and BancFirst
Given the investment horizon of 90 days Texas Capital Bancshares is expected to generate 1.11 times more return on investment than BancFirst. However, Texas Capital is 1.11 times more volatile than BancFirst. It trades about 0.05 of its potential returns per unit of risk. BancFirst is currently generating about 0.04 per unit of risk. If you would invest 5,742 in Texas Capital Bancshares on August 24, 2024 and sell it today you would earn a total of 3,031 from holding Texas Capital Bancshares or generate 52.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Capital Bancshares vs. BancFirst
Performance |
| Timeline |
| Texas Capital Bancshares |
| BancFirst |
Texas Capital and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Capital and BancFirst
The main advantage of trading using opposite Texas Capital and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital position performs unexpectedly, BancFirst can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BancFirst will offset losses from the drop in BancFirst's long position.| Texas Capital vs. Heartland Financial USA | Texas Capital vs. Heritage Commerce Corp | Texas Capital vs. Business First Bancshares | Texas Capital vs. German American Bancorp |
| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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